Économie et Statistique n° 455-456 - 2012Health Systems
Assessing Health Policies: A Solution for A Fair Consideration of Individual Interest
Two methods are generally used to assess health policies. The cost-benefit approach rests on the sum of individual willingnesses to pay (WTPs). It respects individual preferences but emphasizes the preferences of the wealthier because their WTP is typically greater. The cost-effectiveness approach selects the policies that ensure the largest gain in overall health for a given total cost. It does not give an advantage to high-income individuals, but it can have other undesirable effects, such as promoting the treatment of a benign condition that will benefit the greatest number of people by comparison with a severe condition that affects few people. A variant of cost-benefit analysis avoids these different pitfalls. It consists in weighting WTP by coefficients that vary in the opposite direction to an indicator of individual well-being that combines income and health status. Our choice of indicator is the full-health-equivalent income, which consists of a person's actual income minus the amount (s)he would be willing to give up in order to be in perfect health. For a given income, therefore, the indicator declines when health worsens. Unlike subjective utility indices, it offers the advantage of relying only on people's ordinal preferences. We implement this approach using a survey of a representative sample of the French population. Given their financial constraints, low-income earners attach less relative importance to their health. Nevertheless, the coefficients obtained enable us to overweight the least advantaged persons who combine low income, poor health, and a strong preference for improving their health. These coefficients can then be applied to assess any policy for which individual WTPs are known.